Solvency II raises demand for reinsurance at Jan. 1 renewalReprints
Solvency II, the European Union's newly introduced risk-based capital rules for insurers and reinsurers, prompted some increased demand for reinsurance coverage at the Jan. 1 renewal, according to Guy Carpenter & Co. L.L.C.
In its report on the Jan. 1 renewal, a particularly significant renewal date for European buyers of reinsurance, Guy Carpenter said on Thursday that the effect of Solvency II, which came into force on Jan. 1, could be seen in the buying patterns of some cedents.
“After many years of waiting, Solvency II exerted a meaningful influence on buying, and we expect this to increase in 2016 as the new regime becomes embedded,” Nick Frankland, CEO of Guy Carpenter's Europe, Middle East and Africa operations, said in a statement accompanying the report.
Some cedents bought higher limits at the Jan. 1 renewal, prompted in part by the risk-based capital demands of Solvency II, said Richard Hewitt, head of business intelligence for the Europe, Middle East and Africa region, for Guy Carpenter in London.
This was particularly noticeable for some reinsurance buyers in the Nordic region and Central and Eastern Europe, he said.
While some cedents bought more coverage to gain capital relief under Solvency II, others entered into structured deals, Mr. Hewitt said.
Solvency II will be a “journey” as the rules are implemented across all European Union member states and cedents' demand for reinsurance, and the type of coverage they need, will evolve, Mr. Hewitt said.
This may lead to changes in product development, Mr. Hewitt said.